Correlation Between Shake Shack and Cadeler AS
Can any of the company-specific risk be diversified away by investing in both Shake Shack and Cadeler AS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shake Shack and Cadeler AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shake Shack and Cadeler AS, you can compare the effects of market volatilities on Shake Shack and Cadeler AS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shake Shack with a short position of Cadeler AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shake Shack and Cadeler AS.
Diversification Opportunities for Shake Shack and Cadeler AS
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shake and Cadeler is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Shake Shack and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS and Shake Shack is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shake Shack are associated (or correlated) with Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Shake Shack i.e., Shake Shack and Cadeler AS go up and down completely randomly.
Pair Corralation between Shake Shack and Cadeler AS
Given the investment horizon of 90 days Shake Shack is expected to generate 1.35 times more return on investment than Cadeler AS. However, Shake Shack is 1.35 times more volatile than Cadeler AS. It trades about 0.08 of its potential returns per unit of risk. Cadeler AS is currently generating about 0.07 per unit of risk. If you would invest 4,920 in Shake Shack on August 27, 2024 and sell it today you would earn a total of 7,381 from holding Shake Shack or generate 150.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 46.77% |
| Values | Daily Returns |
Shake Shack vs. Cadeler AS
Performance |
| Timeline |
| Shake Shack |
| Cadeler AS |
Shake Shack and Cadeler AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shake Shack and Cadeler AS
The main advantage of trading using opposite Shake Shack and Cadeler AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shake Shack position performs unexpectedly, Cadeler AS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cadeler AS will offset losses from the drop in Cadeler AS's long position.| Shake Shack vs. Dominos Pizza | Shake Shack vs. Papa Johns International | Shake Shack vs. Chipotle Mexican Grill | Shake Shack vs. Darden Restaurants |
| Cadeler AS vs. Kenon Holdings | Cadeler AS vs. GameStop Corp | Cadeler AS vs. Concorde Gaming | Cadeler AS vs. NRG Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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